Often, attorneys advise clients on FLSA issues, such as exemption issues.  Then, a lawsuit ensues and the employer may want to use the defense that it relied in good faith on its attorney’s advice.  The potential problem that creates is that the plaintiffs may then seek production of the otherwise confidential communications on this issue between lawyer and client.   A recent case illustrates how dangerous this can be as a federal Judge has rejected an employer’s bid not to turn over communications between its officials and its lawyers on the classification issue.  The case is entitled Brown et al. v. Barnes & Noble Inc., and was filed in federal court in the Southern District of New York.

The Judge rules that the employer waived the attorney-client privilege concerning the communications when the employer injected the good faith defense to the proceeding to shield it from liability.  The Judge noted that there was a “longstanding line of precedent holding that a defendant asserting a good faith defense has waived privilege over communications which have a bearing on the defendant’s state of mind.”

The employees had filed suit in 2016, alleging they were misclassified.  They have, interestingly, been unsuccessful on three occasions in securing class certification.  The issue here concerned the report generated by a consulting firm which analyzed whether the café managers were exempt from overtime.  The Company refused to produce this as well as communications with its attorneys and between executives and the attorneys where they discussed the conclusions of the report.

The Company tried a different approach in its defense to this motion.  The Company asserted that the VP, HR, was the “one” who made the classification decisions/analysis and this did not involve a reliance upon counsel.  On this basis, the Company argued that this meant that its attorney communications were and should stay privileged.  The Judge disagreed.  The Judge ruled that the documents were pertinent and the plaintiffs should be able to see them and ascertain whether the VP, HR acted in a manner contrary to the advice of counsel.  That might undercut the “good faith” defense.

The Takeaway

Employers must be acutely aware that when they interpose a good faith defense, that, by definition, injects the decision making process of management officials into the equation.  If that defense involves communications from their attorney, those communications or the letter or memoranda that frames the lawyer’s opinions are in the mix and may be discoverable.  Here, the Company sought to avoid that by asserting that the HR official made the decisions independently.

Can’t have your cake and eat it…

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